The longest S&P 500 rally ever?

At 2,800, the average estimate of nine strategists tracked by Bloomberg points not only to another year of all-time highs, but also an extension of a bull market that would make it the longest ever recorded.

As Wall Street equity forecasters discharge their annual duty of predicting another up year for the S&P 500 Index, it’s worth taking a moment to notice what would be accomplished should that projection come true. At 2,800, the average estimate of nine strategists tracked by Bloomberg points not only to another year of all-time highs, but also an extension of a bull market that would make it the longest ever recorded. Born in the depths of the financial crisis, the advance that started in March 2009 is nine months away from surpassing the 1990-2000 run from the dot-com era.

A 16% gain this year has put the S&P 500 on track for its best annual rise since 2013, eclipsing even the highest forecast made in January. Stocks have rallied four years longer than they did in the mid 2000s, the S&P 500 is 66% higher than its peak in 2007, and price-earnings ratios have expanded by more than 4 points. Bloomberg

‘Stealth hedging’ shows investors not complacent

With the US stock market at a record high and daily stock gyrations near multi-decade lows, some investors have raised concerns about the lack of fear in the market, but US equity options market data suggests investors are far from complacent.

Positioning in options on S&P 500 index and CBOE Volatility Index shows investors have been gradually adding to hedges over the last few months.

For S&P 500 index options, there are 2.1 puts open for each open call contract, close to the most defensive this measure has been over the last five years, according to options analytics firm Trade Alert data. While some of put activity may be due to investors selling puts to generate income, brisk put volume suggests renewed interest in protective positions, analysts said. Reuters

Oil options are the cheapest in three years

Betting on price swings in oil costs the least in three years before next week’s Opec meeting. Implied volatility of options on second-month West Texas Intermediate futures sank to 20.94% Friday, the lowest level since October 2014, according to data compiled by Bloomberg.

Volatility has been sinking as futures move steadily higher, with prices reaching $59 a barrel for the first time in over two years.

This week’s cheap options may prove a good deal, if the Opec/non-Opec meeting next week brings any surprises that send prices gyrating. The organization and Russia are said to have agreed on the framework of an extension of the oil supply cuts beyond March.